The budget President Barack Obama will submit on April 10 will contain a proposal that would prohibit individuals from accumulating more than $3 million in Individual Retirement Accounts (IRAs) and tax-preferred retirement accounts.
According to a White House statement, the Obama administration believes the current rules allow some wealthy individuals “to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”
“The budget would limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million in 2013,” the statement said. “This proposal would raise $9 billion over 10 years.”
Brian Graff, executive director and chief executive officer of the American Society of Pension Professionals and Actuaries, told Bloomberg News his group intends to “vigorously oppose” the proposal.
“It is a plan killer,” Graff said. “As business owners reach the cap, they will lose their incentive to maintain a plan, and either shut down the plan or greatly reduce benefits. This would leave workers with a greatly diminished plan or without any plan at all.”